A lawyer for Maurice Greenberg, American International Group's ousted chairman and chief executive officer, said that the New York Attorney General's Office has agreed to drop "key claims" in the civil fraud case against his client.
However, Brad Maione, a spokesman for New York Attorney General Eliot Spitzer, reacting to the announcement by Mr. Greenberg's attorney–David Boies–said: "We believe the core of our case remains."
Mr. Maione, in a later e-mail, said that the changes in the case involved dropping AIG as a party, under the settlement that was reached by the company in February.
The company agreed to pay a record $1.64 billion to settle state and federal charges of securities fraud, bid-rigging and failure to pay proper contributions to various state workers' compensation funds.
The AIG settlement did not include Mr. Greenberg, who contends he and the company did nothing wrong. AIG reached the agreement after Mr. Greenberg had been forced out of the company.
Mr. Maione said the amended complaint no longer asserts an insurance law cause of action–which only involved AIG, not Mr. Greenberg and AIG's former chief financial officer, Howard Smith, who was dismissed by the company.
Further, he said, the new amended complaint drops the claim involving AIG's alleged improper accounting of required payments to workers' comp funds, "for which we received a full remedy for the state of New York and hundreds of millions for the other states in the AIG settlement."
Also dropped is a claim the Attorney General's Office said was remedied when AIG reversed other accounting actions.
The amended complaint "is an effort to streamline discovery, allowing us to focus our efforts on the securities fraud claims at the heart of the case. The remaining claims involve direct efforts by Greenberg and Smith to mislead the investing public about the true state of AIG's financial condition," Mr. Maione wrote.
Those portions of the complaint, he said, include an AIG "sham reserves transaction" with Berkshire Hathaway subsidiary GenRe and other alleged accounting deals involving improper adjusting of books, as well as schemes to disguise underwriting losses that involved Capco Reinsurance Co. Ltd. and Nan Shan Life Insurance Co. in Taiwan.
Mr. Boies' announcement did not immediately spell out what segments of the case he was referring to.
"We appreciate that the Attorney General has kept an open mind, considered the facts we have presented, and has now decided to drop these key claims from the complaint," he stated.
"We are confident that when all the facts are out, the remaining claims, which relate to accounting disputes involving much smaller amounts than the claims that are being dropped, will also be dismissed," he added.
Howard Opinsky, a spokesman for Mr. Greenberg, added: "As we have said, Mr. Greenberg's actions as chairman and CEO of AIG were legal, based on sound business judgment and in the best interests of AIG shareholders. Shareholders are owed an explanation as to why $1.6 billion in company funds were spent to settle allegations that do not withstand scrutiny."
Mr. Boies added: "To the extent that the remaining accounting disputes affected AIG's financial statements at all, most of the effect is attributable to accounting decisions that were undisputedly reviewed with, and approved by, AIG's current management."
Vincent Sama and Andrew Lawler, attorneys for Mr. Smith–the company's former CFO, who was dismissed by AIG and is a defendant in the same civil fraud case as Mr. Greenberg–said: "We are pleased by this development and are confident that, after all the facts are considered, the remaining claims will be dismissed."
In contrast to Mr. Maione's statement, the defense attorneys said "the most explosive and financially significant claims in the Attorney General's suit were dropped pending a potential court order tomorrow to compel the production of documents central to Mr. Greenberg's defense."
The case is currently before New York Supreme Court Justice Charles E. Ramos, in Manhattan, a county level tribunal.
The announcement by Mr. Greenberg's attorney noted that earlier this year, his legal team obtained a court order requiring AIG to turn over to Mr. Greenberg the so-called "internal investigation" report, which the defense alleges Mr. Spitzer used to base his charges.
Nicholas Gravante, another of Mr. Greenberg's lawyers, told National Underwriter in January that the attorney general "colluded with AIG to concoct an investigation that would justify the forced retirement of Mr. Greenberg and baseless fraud accusations made by the AG on national TV. We intend to use every available legal option to force the AG to turn over all evidence to which Mr. Greenberg is entitled."
Mr. Boies said today the legal team is making efforts to expedite discovery to enable them to seek dismissal of the entire case.
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